Earnings Per Common Share

12 Months Ended

Dec. 31, 2012

Earnings Per Common Share

Earnings Per Common Share

(19) Earnings Per Common Share

        The following table illustrates the computation of basic and diluted earnings per share (dollars in thousands, except per share data):

	Year Ended December 31,
	2012			2011			2010
Numerator
Income from continuing operations	$	812,884		$	547,338		$	315,346
Noncontrolling interests' share in continuing operations		(12,411	)		(15,484	)		(13,563	)
Income from continuing operations applicable to HCP, Inc.		800,473			531,854			301,783
Preferred stock dividends		(17,006	)		(21,130	)		(21,130	)
Participating securities' share in continuing operations		(3,245	)		(2,459	)		(2,081	)
Income from continuing operations applicable to common shares		780,222			508,265			278,572
Discontinued operations		33,958			7,156			29,049
Noncontrolling interests' share in discontinued operations		(1,891	)		(119	)		(123	)
Net income applicable to common shares	$	812,289		$	515,302		$	307,498
Denominator
Basic weighted average common shares		427,047			398,446			305,574
Dilutive potential common shares		1,269			1,772			1,326
Diluted weighted average common shares		428,316			400,218			306,900
Basic earnings per common share
Income from continuing operations	$	1.83		$	1.28		$	0.91
Discontinued operations		0.07			0.01			0.10
Net income applicable to common stockholders	$	1.90		$	1.29		$	1.01
Diluted earnings per common share
Income from continuing operations	$	1.83		$	1.28		$	0.91
Discontinued operations		0.07			0.01			0.09
Net income applicable to common shares	$	1.90		$	1.29		$	1.00

        Restricted stock and certain of the Company's performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, which require the use of the two-class method when computing basic and diluted earnings per share.

        Options to purchase approximately 0.6 million, 1.1 million and 1.9 million shares of common stock that had an exercise price in excess of the average market price of the common stock during the years ended December 31, 2012, 2011 and 2010, respectively, were not included because they are anti-dilutive. Additionally, six million shares issuable upon conversion of four million DownREIT units during the years ended December 31, 2012, 2011 and 2010 were not included because they are anti-dilutive.